U.S. coffee shop chains lose 24% market value amid Covid-19

Allegra Group says the industry’s $11.5 billion sales plunge wiped out nearly a quarter of the market. The chain coffeehouse sector faces a two-year recovery before returning to pre-pandemic sales levels.

LONDON -- Due to Covid-19 disruptions, the U.S. coffee chain sector, dominated by the Starbucks and Dunkin’ Donuts brands, witnessed a 24% sales drop to $36 billion in the past 12 months, according London-based researcher Allegra Group. Combined, Starbucks and Dunkin’ command 66% of the total U.S. branded coffee shop market. The total number of outlets contracted 0.6% to 37,189 during the period.

With hope of a successful vaccine rollout under the incoming Biden administration, Allegra’s World Coffee Portal forecasts the branded coffee shop sector will return to pre-pandemic sales levels by 2023. The recently released study found that 65% of U.S. industry leaders think coffee shop trading conditions will improve over the next 12 months. 

“The US coffee shop market is enduring the worst trading environment in living memory, with the Covid-19 pandemic piling extraordinary pressure on hospitality businesses across the country,” said Allegra Group founder and chief executive Jeffrey Young. “However, with a changing political situation, the prospect of mass vaccinations and operators rapidly adapting with new trading formats, there is now light at the end of the tunnel after an incredibly challenging year.

“Despite ongoing market turbulence, Young continued, “coffee shops will remain a vital part of the US economy and social framework for many years to come. We expect trading to begin stabilizing from summer 2021, however it will take a number of years for operators to fully readjust to the ‘new normal.’”

More details from the Allegra Group’s report, titled “Project Café USA 2021,” is available here.